Question

Marconi Co. has the following information available for the current year: Net Sales $ 758,000 Bad Debt Expense 52,000 Accounts Receivable, Beginning of Year 128,000 Accounts Receivable, End of Year 63,000 Allowance For Doubtful Accounts, Beginning of Year 50,000 Allowance For Doubtful Accounts, End of Year 70,000 What was the amount of write-offs during the year

Answer 1

$32,000

Step-by-step explanation:

When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.

To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.

Increase in doubtful debt = $70,000 - $50,000

= $20,000

This amount would have been posted between the bad debt expense and doubtful debts accounts.

The movement in the allowance for bad debt account is as a result of additional bad debts and debts written off. This may be expressed mathematically as;

Opening balance + Bad debts - amount written off = closing balance

50,000 + 52,000 - amount written off = 70,0000 (all amount in $)

Amount written off = 50,000 + 52,000 - 70,000

= $32,000